15 August 2016
THE Competition Tribunal approved on Friday African Rainbow Capital’s (ARC’s) deal to buy 30% of shares in ooba — a mortgage originator controlled by SA’s biggest estate agencies — subject to conditions preventing the exchange of sensitive competitive information between key figures and groups in the merger.
The deal had passed after months of delays following the Competition Commission’s decision in May to approve the transaction, with conditions that there should be no overlap between board members of three companies involved in the merger — ARC, insurer Sanlam, and unlisted short-term and life insurance group, Hollard.
Besides easing access to mortgage loans for prospective homeowners, ooba — whose directors include high-ranking executives at realtors Lew Geffen Sotheby’s, Pam Golding Properties, Jawitz, and Seeff — provides insurance products through subsidiary ooba Investment Holdings, in which it owns 75%. Hollard holds the rest of the shares in the subsidiary.
The tribunal said Hollard, Sanlam and ooba were competitors in the provision of short-and long-term insurance products, although ooba’s share of this market was "very small". The conditions required ARC to ensure its nominees to the ooba board were not the same people serving on the boards of Sanlam or its subsidiaries, or its executive and management committees.
ARC joint-CEO Johan van der Merwe said the black-owned and controlled investment company had raised objections to the conditions at the Competition Tribunal in June. ARC, wholly owned by Ubuntu-Botho Investments (UBI), had the power to pick three members of the Sanlam board by virtue of its 14.5% empowerment shareholding in Sanlam. UBI is majority-owned by businessman Patrice Motsepe’s family trust.
"In ARC’s opinion, these were too onerous. The tribunal was reconvened on August 10 2016 to allow both ARC and the Competition Commission to address ARC’s objections, and to allow for legal submissions thereon," he said.
But the ARC acquisition would create an indirect structural link between the three companies, the tribunal said. This effectively ruled out Motsepe, who also served as Sanlam’s deputy chairman; as well as Rejoice Simelane and Johan van Zyl, owing to their holding nonexecutive directorships at the insurer.